Manufacturing Technology Orders Are Down – When Will Conditions Improve?

September U.S. manufacturing technology orders (USMTO) were up 11 percent compared to August. We did come out of the summer doldrums, like we usually do, but we didn’t do as well when you compare September orders year-over-year.

September U.S. manufacturing technology orders (USMTO) were up 11 percent compared to August. We did come out of the summer doldrums, like we usually do, but we didn’t do as well when you compare September orders year-over-year. Manufacturing technology orders were down 17 percent September 2014 was one of the top three months in the history of the USMTO program.

Last year AMT forecasted a 5% decline in orders in 2015 from 2014. We are now looking at finishing the year down about 17 to 18 percent. The real question is how long will this downturn last.

Although manufacturing will be soft heading into the new year, several factors point to a very nice autumn in 2016. Analysts at AMT’s Global Forecasting & Marketing Conference in October suggested that manufacturing will have a fairly strong 2017 and 2018 and really no signs of a significant downturn until the latter part of 2018 or 2019.

Signs that the latter part of 2016 will pick-up:

The automotive industry will introduce many new models that will need shorter production runs, requiring new capital investments in manufacturing technology to produce them.

Aerospace is expected to be strong for the next 3-4 years.

Medical equipment is beginning to pick up and will likely be stronger in the first half of 2016 than the second half of 2015. Growth will be strong into the next decade as the population ages and technology changes the way patients are treated.

Positives from the USMTO numbers this month:

New England aerospace components, mainly for engines, helped drive their order base up by 20-40 percent.

The Southeast had $1.6 billion of new investment and new plants driven by the automotive industry.

Manufacturers can take solace in the fact that this will be a fairly short downturn. Congress can help boost capital investment in 2016 by acting to extend increased Section 179 expensing and 50% bonus depreciation which expired last year. You can help by urging your Representative and Senators to act now to renew these provisions for at least 2015 and 2016. That will give us two years of solid stability and inject a measure of certainty in the business environment. Go to AMTonline.org/writecongress for a sample letter and information on contacting your members of Congress!